This content is from: Wealth Management

Schwab: ‘This Has to Be More Than One and One Equals Two’

The discount brokerage’s message to clients, employees, investors, and the press after closing the deal to acquire TD Ameritrade.

Charles Schwab closed its $26 billion deal to acquire TD Ameritrade on Tuesday, creating a giant new company with $6 trillion in client assets across 28 million brokerage accounts, and merging the two largest RIA custodians.

Schwab President and CEO Walt Bettinger said in a statement the closing was a “historic moment,” as two like-minded companies joined. The chief executive also appeared in a dramatic nearly four-minute long video released Tuesday, in which he credited rival TD Ameritrade for years of innovation that pushed his own company to improve.

Shortly after the Department of Justice approved the deal in June, Schwab began announcing some of its plans. Among other things, Schwab plans to keep TD Ameritrade’s thinkorswim and thinkpipes trading platforms and integrate them into its offerings for retail and RIA clients. 

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Few other changes have been decided or publicly released. Integration of the two companies is expected to occur over the next 18 to 36 months and they will serve their respective clients until then.

But changes are coming and some could arrive sooner.

“Looking forward, we intend to quickly and efficiently harness our complementary strengths in order to break down even more barriers for investors. In doing so, we intend to deliver a winning combination of low costs, great service and industry-leading technology to support our clients, and the advisors who serve them, across every phase of their financial journey,” Bettinger said in a statement.

In a press conference Tuesday morning, Bernard Clark, the head of Schwab Advisor Services, largely echoed Bettinger’s optimism about what was ahead. “Most everyone on my leadership team, I will tell you, and on the TD Leadership team, has felt wonderful talking through this.”

Responding to a question about the acquisition’s potential impact on personnel, Clark had no definitive answer. But he offered a likely reality as two similar companies come together and seek to achieve the synergies that made the deal attractive in the first place. “This has to be more than one and one equals two.”

“It’s a little too soon. We’re really just starting to get into the depths of knowing each other,” Clark said. “I suspect that there will be some hard days ahead of us… we will have some great people who won’t be with us in the future, for certain.”

There was an air of concern during the call that news of changes, especially related to personnel, would be reported by the journalists before they were formally announced. Schwab wants “employees to always hear things first” and is acting thoughtfully about the “order of which these many moving parts are communicated,” Clark said.

To questions Clark doesn’t have answers for, he could only ask for patience and promise to share information when could. He encouraged reporters and RIAs with questions to reach out to him.

“If you don't see the logic in what we’re doing, call me,” he said.

With TD Ameritrade’s RIAs, Schwab will be the custodian to well over 10,000. About 30% of TD Ameritrade’s RIAs also custodied assets at Schwab, Clark said. Last week, all of the TD Ameritrade RIAs without any affiliation with Schwab were invited to its annual Impact conference, a virtual version this year after the in-person was cancelled

Michael Thrasher (@Mike_Thrasher) is a reporter at RIA Intel based in New York City.

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